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1. (6 points) ACT Inc. has a $1,000 (face value), 30 year bond issue selling for $838.88 that pays an annual coupon of 10.0 percent.

1. (6 points) ACT Inc. has a $1,000 (face value), 30 year bond issue selling for $838.88 that pays an annual coupon of 10.0 percent. Their marginal tax rate is 40%.

A. What would be BAT's current before-tax component cost of debt?

B. What would be BAT's current after-tax component cost of debt?

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